Chance for dairy sector to leave past behind

THE ICOS National Conference will address the key issues facing the dairy sector as it gears up for the end of milk quotas.

The conference is taking place tomorrow and the aim is to address the challenges co-ops and their members face in changing markets.

An anticipated 50% increase in milk supply is thought possible under the quota-free regime.

The big question is are we up for the challenge and can the sector make the changes necessary to ensure the amount of milk being produced can be increased by half the current output?

The challenges are significant, but the positives from this major shift in EU farm policy offers Irish dairy farmers great potential.

The change should help unify the sector and allow farmers and processors to put in place the most efficient and effective system.

The sector has been loss making for the past few years as farmers struggled to bridge the loss of income. Indeed, without the indulgence of some players in the industry, a lot of farmers would have been in very serious trouble.

That aside, the changes probably offer the dairy sector the best opportunity to put efficient and effective operations in place.

The other crucial point in all of this is the self-sufficient aspect of the dairy sector. It uses very little that is not home produced and the payback to the economy in terms of earnings and jobs could be substantial if we get this next phase of development right.

ICOS has struggled over the years to do something about rationalising the processing side of the business.

The cost of gearing up for higher milk output is on tomorrow’s agenda. It has proved to be a challenge to the sector in the past and achieving consensus will be a hard task.

The afternoon session will address the future relationship between co-ops and their supplier members.

Such notables as Jim Woulfe, CEO of Dairygold, Michael Dowling of AIB, Dr Onno Van Bekkum and Sean Myers of ICOS will attempt to deal with that.

Given that milk quotas will have disappeared and that some common mechanism will be needed within the co-ops to regulate milk supply and to generate revenue for the expansion of processing capacity that session should provide for some interesting exchanges.

Fortunately, this debate has been well flagged because ICOS has been in serious talks with its co-op members to forge a common consensus on how best to deal with the evolving dairy environment.

How to allow existing farmers expand output as they want without making it difficult for new entrants to get involved is seen as a particular challenge.

ICOS insists that while the industry wants and needs to attract new entrants it is aware that the sector has come through a very difficult patch of weak prices and of the need to inject significant capital into the sector.

The downturn of the past few years shows just how dramatically the markets can turn.

Before the global slowdown the projections were that demand for dairy produce would outstrip supply by up to 3% per annum.

That died with the global crash but, fortunately, much of that demand was being driven by the emerging economies such as India, China and other Asian economies which are starting to again show promising growth.

These are the economies expected to deliver renewed world growth in the period ahead, ensuring in theory at least that demand will pick up and that the sector can look to the future with confidence.

But it has to become more focused in that regard. And if ICOS had put together a few core suggestions for consideration at tomorrow’s event it might help bring greater clarity to the debate.